Lucid secures USD 1.5 billion funding boost ahead of electric SUV launch

Lucid Group announced on Monday that it has secured up to USD 1.5 billion in funding from its largest shareholder, Saudi Arabia's Public Investment Fund. This substantial cash injection comes at a crucial time for the luxury EV manufacturer as it gears up for the production of its highly anticipated Gravity SUV.

The news sparked a positive reaction in the stock market, with Lucid's shares surging approximately 6% in after-hours trading, following a 3.9% decline during the regular session. This financial boost is expected to provide Lucid with sufficient funding through the fourth quarter of 2025, ensuring the company's stability during a critical phase of expansion and product development.

According to Lucid's CEO Peter Rawlinson, the newly acquired funds will be strategically allocated to various key areas. A significant portion will be dedicated to tooling for the production of the Gravity SUV, while another substantial amount will be invested in constructing Lucid's factory in Saudi Arabia. This new facility is projected to have an annual production capacity of 150,000 vehicles, marking a significant step in the company's global manufacturing footprint.

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The investment deal, structured through PIF affiliate Ayar Third Investment, consists of two components. The first is a USD 750 million purchase of convertible preferred stock, while the second is an equivalent amount provided as a credit line. This arrangement represents the second investment from the PIF affiliate this year, further solidifying the strong partnership between the Saudi sovereign wealth fund and Lucid.

Andres Sheppard, a senior equity analyst at Cantor Fitzgerald, commented on the significance of this investment, stating, "The USD 1.5 billion helps to solidify the relationship between PIF and Lucid further. There was some investor concern out there that should the PIF become frustrated with the company that they wouldn't provide any additional commitments." Sheppard also noted that with this latest injection, PIF's total investment in Lucid has grown to approximately USD 8 billion, underscoring the fund's long-term commitment to the EV maker.

The timing of this funding coincides with Lucid's release of its second-quarter financial results, which showed promising signs for the company. Revenue for the quarter reached $200.6 million, surpassing analysts' expectations of USD 192.1 million, according to LSEG data. This performance was partly attributed to the company's strategic price cuts on its flagship Air sedans, implemented in February to stimulate sales amid increasing consumer preference for more affordable gasoline-electric hybrid vehicles.

Lucid's decision to reduce prices by up to 10% on its luxury electric sedans appears to have paid off, helping to drive sales during the April-June period. This move was seen as a necessary step to remain competitive in an increasingly crowded EV market, where consumers are becoming more price-sensitive.